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    Published on: September 23, 2003

    Response to yesterday's story about the boom taking place in Arkansas because of Wal-Mart's growth…

    MNB user J. Michael Zerr wrote:

    I am an executive recruiter and Tyson Foods is one of my clients.

    The upside of this is that a previously underdeveloped geographic area now has a professional well educated population that have created a fine area to raise a family without the cost of living associated with living on one of the trendy coastal cities.

    We need more prosperous, low cost of living areas and less of the overpriced high cost of living areas.


    The story about Arkansas noted that because Wal-Mart is getting so much attention from suppliers, it may be detracting from the attention being paid to other retailers; we also noted that there are new studies saying how much of the nation's food business Wal-Mart will control in the next five years. This made us wonder whether the only reason Wal-Mart isn't facing greater critical scrutiny is the fact that so many of its moves are looked at in a vacuum - that the greater whole isn't examined in context.

    One MNB user wrote:

    Their moves are looked on as being better moves for the multitude of grocery shoppers......

    What chain didn't grow by building new and more stores or by practicing better business management?


    We agree. Wal-Mart isn’t doing anything wrong.

    But there have to be concerns about the long-term impact on the rest of the retailing community.

    Is it healthy for so much of the nation's retailing business to be done by one entity? How much is too much?

    Of course, it is up to other retailers to offer consumers a compelling reason to shop someplace other than Wal-Mart. And that's the though part.

    MNB user Tim Yount wrote:

    Remember the old term: "What's good for General Motors is good for the USA!" Wal-Mart, I feel, is generating their own brand of "goodness". It certainly spells trouble for those smaller retailers that want to compete to have to leap such a high bar as can be set by those vendors who lock-step to Wal-Mart. The technology cost alone can ultimately spell disaster for smaller stores. This also raises the cost of entry into the market for the smaller retailer.

    I totally agree that Wal-Mart's individual issues are scrutinized in a vacuum. Taken as a whole, and you can applaud them loudly for doing a good job, they are only doing this things for their own benefit. They are their own industry and perhaps don't have any cause to consider the state of retail as a whole. No beneficent dictator here.

    When I'm 80 and can't retire, though, I do want that "Greeter's" job. It's either that or bagging groceries. Oh, I forgot, they don't do that at Wal-Mart.





    In response to our story about Sears opening a store with a grocery section, one MNB user wrote:

    It will be interesting to see how Sears does in Grocery, after watching how their foray into furniture was such a failure. Does their business model enable them to be great in the grocery category? I guess we'll find out.




    We also got an email objecting to our story about discrimination against fat people:

    I think you contradicted yourself here:

    "We're pretty sure that there are some jobs that simply aren't appropriate for obese people - like, say, a waiter at a restaurant, where an obscene girth might send the wrong message about the cuisine (though some might say it is truth in advertising)."

    "But we're also confident that discrimination, in any form, is wrong."


    You went and made a discriminating comment and then said you were confident it was wrong to do just that? Come on now...

    "Which leaves us conflicted about what's appropriate and inappropriate."

    That was inappropriate.


    That's exactly our point. Discrimination is wrong. And yet, knowing that, in certain cases, we might be tempted to practice it…and we might even be able to rationalize it.




    Regarding yesterday's piece about the problems of organized theft from supermarkets, one MNB user wrote:

    I greatly enjoy reading the MorningNewsBeat and your opinions, and found the news flash…highly amusing. As a former retail industry veteran with Safeway out in California, I would venture that this "organized theft" has been going on for over 10 years. In fact, these "gangs" or groups also target liquor, batteries, film, OTC drugs, and cigarettes. Basically, items that are compact and have decent resale value. Reminiscent of the food stamp scams of the past, the end users are the many smaller grocers willing to support the loot that these (generally) druggies offer.

    At many 24 hour Safeways, security at night is essentially nonexistent, and on countless occasions, store management would find, upon morning arrival, that whole sections were gutted. Safeway's official policy faults employees for engaging with (trying to stop) shoplifters, rather than commend them.

    Furthermore, Safeway tends to err on the side of extreme caution when it comes to preventing lawsuits, reasoning that lost merchandise is not worth the risk of assault, battery, or other charges. More importantly, Safeway has found, according to its studies, that theft is primarily committed internally, and has therefore decided that preventing shoplifting is a low priority. In fact, the most common preventive measure is to simply keep the shelves "less full." Believe me, the so-called "security guards" and cameras are generally just there to provide the appearance of safety.

    Btw, I encourage any current Safeway employee/spokesperson to dispute my contentions. By "reading between the lines" of what they write, you'll find the truth.





    Our piece expressing concerns about the Patriot Act and its ability to extract loyalty marketing information from retailers generated several emails:

    MNB user Stephanie Asher wrote:

    One (more) reason to oppose the Patriot Act... Consider a terrorist or criminal who is planning some illegal activity and buys a bunch of related books or materials. Do you think this person is going to use his store loyalty card, pay by credit card or check, or in any other way create a link to his true identity? No folks, he's going to shop discretely, and pay with cash. Or perhaps he's adopted a false identity. Criminals are sneaky by nature! So in the end, it's the average, honest shopper who's privacy is being invaded.

    On the other hand, terrorists might be tempted to use the cards to save a buck…after all, sometimes people behave in contradictory ways.

    Didn’t the so-called religious zealots who perpetrated the 9/11 attacks spend some of their last hours getting lap dances?

    However, another MNB user wrote:

    It cannot be both ways. If you want to be sure there are no guns on the airplane, you might get your bags checked, too. To find espionage, it is necessary to dig in places not usually open to public eyes. The question comes down to security or relinquishing freedoms.

    We don't mind having our bags checked. It is the price of flying on a plane these days.

    But is having the government pry into our shopping habits the price of going to the supermarket? Or having the government pry into our Internet browsing habits the price of using a computer?

    We think that is questionable, even in post-9/11 America.




    We wrote enthusiastically yesterday about eating Pork Jowl Bruschetta, which prompted one MNB user to write:

    Are pork jowls like beef cheeks? A beef cheek taco is a thing to behold. Yum!

    We have no idea. But we'll trust you on this…
    KC's View:

    Published on: September 23, 2003


    • Wild Oats has announced that it plans to grow the company by as much as 60 percent over the next 30 months (or 25 stores a year), which it says will require a less centralized buying policy, with regions able to be more selective about the products they offer their specific demographics.


    • Not satisfied with dominating the market for Australian steaks, Outback Steakhouse has announced that it plans to partner with the founder of the P.F. Chang's China Bistro chain to develop Paul Lees Chinese Kitchen, a new casual dining concept. The goal is to create a suburban chain with a lower price point than either the Outback of P.F. Chang concept.


    • Late this year, Tesco reportedly will consolidate its four customer magazines (Tesco Clubcard, Tesco Recipe, Tesco Vegetarian and Tesco Healthy Living), into one publication. The new magazine will be given away free to loyalty card holders, and sold in-store to other consumers.

    KC's View:

    Published on: September 23, 2003

    Wal-Mart's Asda Group in the UK will start offering household, travel, and car insurance services through its 283 stores by the middle of next month.

    The services will be offered through a partnership with the Norwich Union insurance company.

    According to the company, it is the first time any Wal-Mart division has sold insurance.
    KC's View:
    But we suspect not the last.

    Published on: September 23, 2003

    USA Today reports this morning that American workers should expect only the "modest" salary increases in 2004, no matter how much lip service is given to an economic turnaround.

    Even after 2003 provided the lowest pay increases in three decades, according to several surveys the average employee increase next year will be about 3.6 percent. Bonuses are expected to be down as well, to under nine percent. And another survey suggested that only 10 percent of polled forms planned to even give raises between now and the end of the year.
    KC's View:
    If you'll recall, we also had a story recently about how many employees plan to jump ship as soon as the economy recovers and provides greater opportunity.

    No wonder.

    Employers who don't respect the fact that their employees are their prime asset, and instead treat them like liabilities on the balance sheet, are making a serious and long-term mistake.

    That doesn’t mean that you have to go broke paying people more money when revenues are down. But there have to be ways - some of them economic - to make people feel fulfilled, appreciated, and well compensated.

    Published on: September 23, 2003

    Interesting piece by columnist Jerry Heaster in the Kansas City Star suggesting that the nation's long-term financial problems may be caused by "economic hypocrisy" - Americans who buy inexpensive foreign products, then complain that jobs are moving overseas.

    Prosperity, he suggests, is a "myth fueled by America's mass self-delusion that you can live life on the cheap and still enjoy a well-paying job."

    Heaster writes, "Companies downsize and do everything possible to restrain labor costs because it accomplishes two goals: One, it helps in the eternal quest to keep product and service prices as low as possible at retail and thus remain competitive; two, if restraining outgo enhances income, the corporate stock price is bid up by investors who like the improving profits picture.

    As we all know, there are two things Americans prize above all else: low consumer prices and high stock prices. Americans, however, also like high wages and salaries, which is an end often at odds with low consumer prices and high stock prices."

    There is, Heaster writes, one basic question: "Do Americans sincerely believe they can forever immunize themselves from the consequences of a low price world they've created?"
    KC's View:
    Americans may believe it.

    But they're wrong.

    Published on: September 23, 2003

    Iowa-based Hy-Vee is scheduled to open a new c-store/gas station in the community of Waterloo today, featuring 12 fuel pumps in addition to coffee, sandwiches, and other convenience-oriented products.

    The unit is the 27th Hy-Vee Gas to be opened by the 216-store company.
    KC's View:
    Smart move. And it is no surprise that Hy-Vee is making it.

    Published on: September 23, 2003

    Despite reports in the British media that Philip Green no longer is interested in bidding for Safeway Plc, the retail entrepreneur says that he has no plans to pull out of contention. "Having waited for five months I'm not going to pull out now," he told one British newspaper.

    Green says he will wait until government officials have ruled on which supermarkets retailers may bid for Safeway Plc before making a final decision on whether to bid on the nation's fourth largest retailer. The Competition Commission has studied the impact of an acquisition of the company by Tesco, Wal-Mart, Sainsbury and William Morrison Supermarkets, and has recommended to the government which of the companies should be allowed to bid; a final decision by the government is expected by the end of the month.

    Conventional wisdom is that Morrison will be the one that will get the government's blessing.
    KC's View:

    Published on: September 23, 2003

    Interesting day for the sporting goods business…

    • Amazon.com announced that it has launched its new Sporting Goods store, which has Amazon teaming with leading sporting goods merchants to offer more than 3,000 popular brands covering more than 50 sports, "from archery to basketball to paintball to skateboarding, and everything in-between."

      "Amazon.com's goal is to offer customers breadth and depth of selection across dozens of sports, as well as the easiest way for everyone from weekend warriors to sports enthusiasts to find, discover, and buy sporting goods at great prices," said Stu Haas, senior category manager, Amazon.com Sporting Goods.


    • Toys R Us announced that it has created a new online sporting goods e-commerce site, Sportsrus.com, designed to carry more than 30,000 items "ranging from authentic sporting goods to apparel, games, footwear, fitness equipment, collectibles, and many other categories."

      In order to more efficiently reach consumers, SportsRUs has an alliance with Amazon.com, which allows it to sell products through the Amazon portal.


    • And, CNN reported that while companies like Staples have dominated the office supply market, and retailers like Home Depot have become synonymous with the D-I-Y market, nobody to this point has created a national; retailing face for the $75 billion sporting goods business.

    KC's View:
    Talk about convergence.

    Here's the thing about these stories…

    First of all, if the CNN story is correct, then it makes sense for Amazon and Toys R Us to make a big entrance into the sporting foods business.

    That said, what exactly in Toys R Us's history would suggest that it would be good at sporting goods? Its stores are a mess, and it fouled up its web business so badly a couple of Christmases ago that it had to turn its online fulfillment operations over to Amazon.

    Amazon, on the other hand, has done an excellent job expanding its boundaries.

    It seems to us that this is a perfect example of how expansion can sometimes makes sense, and sometimes make little sense. It all has to do with being able to take care of the core…first. Amazon has credibility. Toys R Us has none.

    That's a pretty good lesson for any retailer.

    Published on: September 23, 2003

    MNB has learned that an executive recruiter has been hired by C&S Wholesale Grocers and is doing a search for a new vice president of marketing and merchandising - as well as for a number of other positions needed to handle its increased workload.

    This would seem to suggest that C&S is aware that even with its vaunted reputation for efficiency, it is necessary to add personnel and infrastructure to handle the added business from the Fleming acquisition and the territory swap with Supervalu.
    KC's View:
    The question remains whether C&S will make the adjustments necessary to provide the level of service expected and needed by independent grocers that it got in the acquisition and swap.

    You could argue, by the way, that in areas where C&S is servicing chain stores, it doesn't need to keep the independents in business - it just has to make sure the chains it serves are successful enough to drive the indies out of business, so it can keep the volume at lower costs and service levels.

    Published on: September 23, 2003

    The New York Times reports that there is a new "delicacy" being promoted by the National Cattlemen's Beef Association - cheeseburger fries, which look like French fries but are breaded deep-fried beef-and-cheese concoctions that seem to be gaining popularity in restaurants.

    The recipe was developed to compete with chicken nuggets and chicken strips. There also is a version being made available for school cafeterias, according to the NYT.

    Here's the nutritional kicker: Each individual cheeseburger fry has about 75 calories and four grams of fat - and the version being peddled to schools has six grams of fat apiece.
    KC's View:
    Shame on them. This organization's understandable desire to get people to eat more beef has clouded their judgment, if they think that getting people to eat more fat-laden, artery-clogging food is going to help their cause.

    Maybe they shouldn't stop at getting school kids to eat this stuff. Maybe they could start a campaign to get them served in coronary care units all over the country.